The Dutch company Tennet is, through a subsidiary, one of the four transmission system operators in Germany that operate the supra-regional power grids, a total of almost 36,000 kilometers of lines. Outside of the world of experts, hardly any electricity customer knows the names of the companies that are involved in this field – in addition to Tennet, these are Amprion, Transnet BW and 50 Hertz – but the transmission system operators play a crucial role in the energy transition. They are supposed to build and then operate the electricity highways over which green electricity, for example from offshore wind farms in the North and Baltic Seas or from the windy regions in the North German lowlands, flows to Bavaria and Baden-Württemberg.
Numerous discussions have taken place in recent months regarding Tennet, between the Netherlands and Germany, between the Federal Ministry of Economics under the leadership of Robert Habeck (Greens), between the state development bank KfW and Tennet’s Dutch parent company, which is state-owned. It’s a big deal.
The costs of expanding the network in Germany were becoming too high for the Dutch, and Germany, in turn, showed great interest in taking over Tennet’s business in Germany. The aim: to gain control over an immensely important piece of infrastructure.
Tennet must invest up to 160 billion euros over the next ten years
But the deal is now unlikely to go ahead. Talks with the state development bank KfW were terminated after the German government informed the Dutch state “that it cannot carry out the planned transaction due to budget problems,” Tennet announced on Thursday. No comment was initially available from the Federal Ministry of Economics.
Insiders estimated the value of the German Tennet network at 20 to 25 billion euros last year. Negotiations with the Dutch government about the state-owned company had dragged on for years. In March, an agreement seemed within reach, according to the Reuters news agency, citing a person familiar with the negotiations. According to the agency, the deal was to have been structured as follows: KfW would have acquired Tennet’s German business and then, in a second step, sold shares to private investors. The federal government would have retained a blocking minority in the long term.
Habeck recently once again advocated the takeover of the Tennet power grid. “I still think it makes sense for the state to ensure that such important infrastructure remains in good hands,” said the Economics Minister.
It is clear that Tennet will have to spend a lot of money on expanding the networks in the coming years. The company’s plans assume up to 160 billion euros, with most of the costs being incurred in Germany. The company stressed that it will stick to its investment plans in both countries. The company will be supported by the Dutch government, which recently granted Tennet a loan of 25 billion euros for 2024 and 2025. The company will also continue to try to use public or private capital markets to finance its German activities.